The operator of Les Bois Park and Gov. Butch Otter are vying to make Idaho the first state in the nation to allow pari-mutuel betting on "virtual" horse racing.

They say revenue from computer-generated, animated races simulcast around the country would revive a sagging industry by boosting purses for flesh-and-blood horses.

But backers suffered a setback Tuesday when key legislators voted to object to an Otter-backed rule allowing the new brand of gambling. Five of six members of two special subcommittees said the issue should be fully vetted by the 2009 Legislature.

"This whole topic deserves more consideration and should come directly from the Legislature," said Sen. Mike Jorgenson, R-Hayden Lake, one of the lawmakers in a two-hour hearing.

Their action, however, is not binding. It only informs the Idaho Racing Commission that two subcommittees of the State Affairs committees object. Only the full Legislature, on a vote of both the House and Senate, can reject a rule proposed by the administration. Supporters of virtual racing have been pouring money to candidates on the Nov. 4 ballot.

The Racing Commission's temporary rule takes effect Nov. 17. If not withdrawn, the first betting could begin that day "or soon thereafter," said Stephen Bieri, owner of Capitol Racing, which operates Les Bois Park in Garden City.

David Hensley, Otter's attorney, said the governor wants to help horsemen. "When virtual racing was presented to the governor's office, we saw tremendous potential for the horse racing industry in Idaho," he said.

Hensley said Otter and his three racing commissioners will consider lawmakers' concerns. "It's clear there are questions about this innovative process."

But Hensley would not say whether Otter might ask the Racing Commission to withdraw the rule. The panel next meets Nov. 12.

Racing commissioner Mike Bosen attended the hearing and said he wants virtual racing implemented before lawmakers convene in January. "This was a big disappointment to me," he said. "I'm hoping they'll move ahead anyway."

Bieri said he owns 30 percent of the company that designed virtual racing software that features a stable of 5,000 horses with different speeds, endurance and other traits. Without virtual racing revenue, Bieri said, he'll have to cut already shrinking purses. With it, he said, winnings for horsemen could increase between several hundred and several thousand dollars a race.

"This is no more meant to replace live racing than the man in the moon," Bieri told legislators. "This is meant to supplement live racing. ... If it doesn't come here, it will go to another state."

Idaho's four horse racing groups back Bieri's plan. "We're bringing the (rules) up to the 21st century," said Tawnja Elison of the Idaho Thoroughbred Association. Also on board are the Idaho Quarter Horse Association, Idaho Horsemen's Benevolent and Protective Association, and the Eastern Idaho Horsemen's Association.

Bieri, who first raised the proposal with the Racing Commission late last year, told lawmakers Tuesday he promised horsemen they would receive about 9 percent of virtual racing revenues. That's the same cut they get from live contests and substantially more than their 3.7 percent share from simulcasts.

Simulcasting operates year-round at Les Bois. Statewide, simulcasting betting totaled $17.5 million in 2007. Betting on live racing was $3.2 million. Live races were held on 46 days at Les Bois Park and 33 days at eight other sites on the "fair circuit."

Bryan Fischer of the Idaho Values Alliance told lawmakers they should resist the attempt to expand gambling on both moral and legal grounds. "This would make Idaho and Boise the Las Vegas of virtual racing," he said.

But the principal organized opposition to the Les Bois plan came from Coeur d'Alene Racing, operator of the former greyhound track at Post Falls. Though live dog racing was suspended years ago because of objections from the public, the park offers simulcast betting.

David High, a former deputy attorney general now working for Coeur d'Alene Racing, told lawmakers his client supports virtual racing but believes the change must come with a new law, not by rule. "Their main concern is that it would poison the well and make legislators very angry," said High.

High said he has drafted a bill for Coeur d'Alene Racing, which seeks "broader" openings to virtual racing.

Sen. Curt McKenzie, R-Nampa, agreed that any proposed changes must be passed by the both Houses and signed by the governor. "If we venture into virtual racing, it should be something we do by statute."

McKenzie said he was concerned that if the rule change is allowed, lawmakers would cede legislative powers to the executive branch. That could include, he said, the Racing Commission allowing any depiction of a virtual competitor, "from any type of animal to rocks rolling down the hill. What's the limit?"

Dan Popkey: 377-6438